The Fifty Dollar Novel

When I wrote it recently, one of my readers, beccadi, commented that a price point like would drive many people out of the market.

I agreed.

I gave some explanation at the time, but I do think that the scenario could probably use a fuller fleshing out.

First, let’s define this a bit more.

I’m talking about the publisher’s list price…not necessarily the price a customer pays in the store. However, I do expect brick-and-mortar bookstores that stick around to be either: used bookstores; or full-priced, full service stores. I’m saying this from the perspective of a former bookstore manager, by the way.

Second, I’m not talking about a special commemorative edition that might be released at the same time as a less expensive “standard edition”. I’m talking about what would be the standard release for a new novel by a bestselling author.

Third, I also want to be clear that this isn’t a prediction. :) It’s a possible scenario. I do think it seems increasingly likely since I first suggested it…

Okay, with that out of the way…

Let’s take a look at where we are now.

Looking at the twenty books that Amazon lists as the New York Times hardback fiction bestsellers, the average price is $27.13. The highest priced one is $35, the lowest priced one is $24.95. Ten years ago, it was $24.53…highest was $28, lowest was $14.95. Twenty years ago, it was 19.58: highest $24.95, lowest $6.98.

Even just looking at those trends, we could project $50 as an average by 2072:

Year

Average

1992

$19.58

2002

$24.53

2012

$27.13

2022

$31.30

2032

$35.07

2042

$38.85

2052

$42.62

2062

$46.40

2072

$50.17

However, I’ve been talking about this happening at a vastly accelerated pace…within the next decade.

Rather than just the predictable price increase one would expect (especially in a product based in large part on natural resources), I’m suggesting this would be a deliberate strategy.

Why would it make sense to rapidly raise prices?

As beccadi asked, wouldn’t that price a lot of people out of the market?

Absolutely.

This is where the difference in thinking between a consumer and a supplier comes into play.

A consumer tends to think in terms of just their own transaction with the supplier. That’s perfectly reasonable: to that person, it is them interacting with the company. A consumer thinks, “Why would they raise the price to fifty dollars? They would lose my business.” They may presume that other consumers will feel the same way.

The supplier, on the other hand, has perhaps thousands of customers (maybe even more). The supplier thinks in terms of populations of sales.

It’s perfectly fine to lose sales, if you make up those sales in other ways.

You could lose one set of customers and gain another set that was equally large…or a smaller set that spent the same amount of money (either by buying more items at a lower price or fewer items at a higher price…or, of course, the same number of items at the same price).

You can never sell something to everyone: people have different motivations for buying things.

Many, probably most, people want to get things for a low price.

Some people want to pay more for things, and to have other people know it. It’s a status thing. If you buy a $100,000 car or a $10 million house, you may do it partly so that other people know you can afford the luxury.

A status seeker might not buy that $100,000 car if only cost $10,000…even if it was the exact same car.

Books used to be in that category, owned by the elite, sometimes in hand-tooled leather covers.

If you are a bookstore manager, or a publisher, you need to be looking at the future.

Will you be able to compete with e-books on price? No, that seems very unlikely. Even though it is possible to find a hardback for less than an e-book, that doesn’t tend to be the case if you are looking at the list prices. It’s usually because a retailer (like Amazon) has discounted the p-book (paperbook). If the Agency Model collapses, which it may under pressure from the US Department of Justice), Amazon will again presumably resume discounting e-books.

You are not going to survive against e-books by competing on price.

Let’s look at these sales motivating factors:

Price

Service

Convenience

Selection

Status

Familiarity/Trust

Novelty

Compatibility

If you are going to keep making hardbacks and selling them in stores, you can’t win on price, selection, or convenience against e-books, certainly. Ignore those in the strategy.

You can win on service, possibly. You can win on status. You do win on Familiarity, for now. You win, in a sense, on trust: people worry that their e-books are going to disappear somehow.

So, let’s say you choose to leverage status.

You start deliberately making books for the elite. You improve the quality of them…making them out of nicer materials, making them heirlooms. Books have been declining in production value for decades. If price savings isn’t an issue, reverse that.

Make books beautiful things that you show off…like diamonds.

The bookstores can also up their service: employing more and better informed salespeople (which also raises their costs).

Don’t count on discounting: that may be “distasteful” to the new market.

Mass market paperbacks are rapidly declining anyway: drop those as a strategy.

Continue to make high quality trade paperbacks: maybe $25. That’s for aspirational readers, people who would like to be in the elite, but aren’t quite there yet.

Are you going to lose a lot of customers with this strategy? Yes, you plan on it.

The clear question: would you have been able to keep those people anyway? Maybe not.

Will you attract different customers…ones who spend more at a time? Yes, that would be the idea.

When you got to the holidays, your more expensive books would be more attractive as gifts…because they are luxury items.

More expensive hardbacks also justify a higher price for e-books.

So, here’s the basic idea:

You lose forty-nine people who would have spent $10 a month on books, and replace them with one person who spends $500 a month on books. During the holiday season, those people who usually spent $30 on books for gifts now spend $50 (buying one book as a gift instead of three…but it’s a more impressive gift), and the big spenders buy books as gifts who wouldn’t have done it at all before.

I’m not saying that the publishers will do this, or even should do this…but it does seem like one possible way for them to continue to make hardbacks.

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16 Responses to “The Fifty Dollar Novel”

You forgot one other sales motivating factor – value. Will the money I spend on this object give me better value than spending that money elsewhere. It will differ for each person, depending on a host of factors. When you raise the price, your competition for the dollar now becomes a whole new category of competing items. Is your $50 book more valuable than $50 of flowers or wine or an entertainment ticket?

That would seem to be an argument for raising the price to me. While there is always competition for your dollars, there would probably be fewer items competing at a $50 price point than at a $25 price point. If someone is already comfortable spending $50, this moves new release novels into that category. I’d also argue that someone who is spending $50 on entertainment or non-necessities may be more willing to get all of the above, rather than someone who is spending $10.

Also, for me, a book certainly trumps the three you listed, which are all ephemera (unless you are going to sell that bottle of wine…).

I’m glad you’ve fleshed this idea out, even though I disagree with it.

“So, let’s say you choose to leverage status. You start deliberately making books for the elite. You improve the quality of them…making them out of nicer materials, making them heirlooms….”

Very ingenious. I suspect some publishers will be forced to try this route because their sales are shrinking and they have to raise price–and as a result they feel compelled to justify the price rise by pointing to better quality.

But the case for books as a luxury/prestige item would be stronger if the sales of existing luxury-type books were more robust. (I mean items like the output of current fine print editions of classics like Moby Dick, collectors’ editions, signed editions, fancy-bound editions, etc.) That would provide a clue to market demand. I suspect a strong clue isn’t there.

And I doubt that current publishers would accept seeing hardbacks pushed into a low-volume niche without putting up a fight and making a Big Move to restructure the economics of the publishing business and radically cut costs, in order to hold onto a larger share. Only a Print-On-Demand (POD) ecosystem could do this.

“If you are going to keep making hardbacks and selling them in stores, you can’t win on price, selection, or convenience against e-books, certainly.”

If hardbacks very printed only via POD, and their price were cut to 50-60% of what it is now, that would keep them competitive with e-books–especially if publishers were setting the wholesale prices of the e-book versions of their hardbacks (despite Amazon’s selling them for a loss, something Amazon can’t keep up forever). E.g., if an e-book version cost one-third less than a hardback version, hardbacks would still sell well enough to be profitable.

Sorry to take so long with a response! I’m still traveling (for a few more days), and my resources are somewhat limited.

For example, I can’t really do a very good search for the sales of those high ends, since this business center computer seems to be challenged by even two open windows at a time. ;) However, since high ends continue to be published, as they have been for decades, that suggests some market for them.

As to this:

“A POD ecosystem could match e-books on selection.”

it requires a couple of things to be true. One is that the POD system can have the necessary storage and/or data connection. Storing the files locally for, say, million books including highly illustrated ones, could be a challenge. Storing them offsite means one is then reliant on a data connection. As anyone knows who has paid with a credit card in a store, that’s not always going to be there. That would require resources to maintain…resources in which Amazon has extensively invested. That doesn’t mean it couldn’t work, but does add to the costs.

I’d be hesitant myself to invest many millions in a system designed to sell paperbooks.

The other key component for there to be selection equity is that authors not be compelled to decide between the POD (Print on Demand) system and e-books. Amazon has bragged about the number of e-book exclusives they have…I believe it is over 100,000. Could a POD system similarly entice people to go exclusive? I find that unlikely. If people will go exclusive with Amazon, but won’t go exclusive with the tradpubs in a box, it makes it difficult for p-books (paperbooks) to match e-book selection.

“it requires a couple of things to be true. One is that the POD system can have the necessary storage and/or data connection. Storing the files locally for, say, million books including highly illustrated ones, could be a challenge. Storing them offsite means one is then reliant on a data connection. As anyone knows who has paid with a credit card in a store, that’s not always going to be there.”

Credit card connections are reliable enough for businesses to rely on. The additional fail-safe backup would be local storage of the 80% of the most popular books. If buyers of less popular books had to “come back tomorrow,” that would still be better than having to “come back next week,” as they must do now.

Bufo: “That would require resources to maintain…resources in which Amazon has extensively invested. That doesn’t mean it couldn’t work, but does add to the costs. I’d be hesitant myself to invest many millions in a system designed to sell paperbooks.”

He who hesitates is lost. If the publishers are facing ruin, they’ll analyze the situation carefully, do a cost/benefit workout, and likely come the conclusion that a POD ecosystem is do-able and has potential. In that case, they’ll likely decide that it must be done, regardless of cost, since the alternative is calamity.

Bufo: “The other key component for there to be selection equity is that authors not be compelled to decide between the POD (Print on Demand) system and e-books. Amazon has bragged about the number of e-book exclusives they have…I believe it is over 100,000. Could a POD system similarly entice people to go exclusive? I find that unlikely.”

I never said or implied that exclusivity would be part of my envisaged POD ecosystem. I agree that exclusivity is not achievable .

Bufo: “If people will go exclusive with Amazon, but won’t go exclusive with the tradpubs in a box, it makes it difficult for p-books (paperbooks) to match e-book selection.”

I wasn’t aware that Amazon’s exclusivity agreement prevented participants from selling POD versions except through Amazon. If so, this would limit the selection a POD system could offer.

OTOH, this wouldn’t necessarily put a significant “ding” in the POD’s selection of books. Many eBook-exclusive authors would not have been published by mainstream publishers, so they currently lose no sales by going up the garden path into Amazon’s walled garden. But once the Big Six decide to “go POD,” where there is much less of an upfront fixed cost in “printing” a book, these marginal authors would now mostly be “publishable,” and thus more of them would hang back from giving Amazon an exclusive.

Where I question what you’ve written is the suggestion that it is a paperbook or nothing. A customer doesn’t have to come back tomorrow, if an e-book is as good. Publishers don’t have to face a “calamity”, if they switch to e-books and abandon paperbooks.

As I’ve noted, though, I think one alternative is for them to do high-priced, quality versions of paperbooks.

It will be interesting to see how it all evolves. You can I can check back in ten years on this, and see what has a bigger marketshare (based on gross, not units)…$50 novels or print-on-demand machines in stores.

I do think there is a market for POD pods in stores, but I do see that as not being a way to maintain brick and mortar bookstores. I still see it as being in a grocery store, or an airport…or a physical media store, which would also have “press on demand” vinyl. :)

I hadn’t thought about the fact that no current PODs (AFAIK) print hardbacks. That means that either publishers would have to continue printing hardbacks as they do now and make only a partial changeover to a POD system, or that they would have to develop a hardback-printing POD. In principle that shouldn’t be impossible, since I presume that automated machines produce hardbacks at present—and that they could be back-ended onto the front end of POD devices. But it would add to the cost beyond what I initially guessed. So, probably, implementation (if it occurs) would be a two-step process, with several years between the first and second steps.

In the meantime, the price of hardback would tend to rise, and their quality to rise as well (to counteract buyers’ reluctance to pay more). This could lead to the $50 book, at least for a while.

I repeat (from a previous thread where we previously head-butted on this topic) my dubiosity about PODs being viable in non-bookstores. They don’t have the $100,000 to justify such an investment. And selling territorial licenses to franchisers (akin to licenses for independent vending machine operators) would not get very far, IMO, because of the much larger investment required, the inability of the franchise-seller to point to many credible success stories, and the strategic-based refusal of major publishers to offer their titles in POD format.

Publishers have a strategic interest in keeping existing chains alive, rather than undercutting them by selling PODs to non-bookstores. They have a tactical interest in not spending the money it would take to convert titles to POD format for use only by non-bookstore locations, especially since there are so few of them that returns on their investment would be puny. It’s an insoluble chicken-and-egg problem at the moment.

A mass conversion to POD format would only make tactical sense if a huge sales volume were anticipated—and that would only occur if publishers decided it made strategic sense to support bookstores (and themselves) by lowering the total costs of the book-printing ecosystem by going all-POD, collectively.

IMO, that must happen within three years, given current trends. We’ll see, as you said.

My guess is that the “other retailer” market (not bookstores/libraries and similar places) will be the market, but again as you say, we’ll see. For example, it might be a good thing in a Target or a Costco. That could even be requested before heading to the store. Order ahead might make this more viable in many circumstances.

Publishers already “undercut” chain bookstores: I could hypothetically buy paperbacks from major publishers in my grocery store, for example. Wal-Marts, Targets, Costcos, CVS, and so on are supplied by publishers now.

I don’t think traditional publishers will choose to particularly prop up chain bookstores, even though they have dominated that channel. If those are going down, they’ll look for other distribution channels…in my opinion. :)

There is at least one author/self-publisher, Cory Doctorow I think, who has already implemented a scheme allowing those who wish to purchase a very expensive corporeal version of his e-books to do so. He has them privately printed and bound in the traditional fashion using high end materials and author selected endplates and coverings. They are, I believe, significantly more than $50 per volume.

Ah, a little Google Fu and here is a link to a depiction of what these crafted books look like:

One of the things I liked about Star Trek: Next Generation was that even though they had other forms of entertainment, such as the holodeck and books on screens that look a lot like a Kindle or iPad, they still had physical books. Captain Picard was frequently shown reading in his quarters, and when he went on vacation, he packed actual books. I’d like to think that physical books will survive into the future. Even though I can no longer read them, I still love the look, feel and smell of a hardback paper book.

I’m guessing those were “replicate on demand”, rather than “print on demand”, at least in some cases. :) I think we love those paperbooks largely because of the association we have with them, not because of their intrinsic value. If someone had grown up with only blank books available (and reading was done somewhere else), would holding a blank book still make them feel good?